AB Agri profits hit by Vivergo shutdown, lower sugar beet feed sales

10-Sep-2019 - Last updated on 10-Sep-2019 at 10:21 GMT

Revenues for UK agriculture business, AB Agri, will be well ahead of last year, driven by higher feed volumes and higher feed prices, reflecting an increase in raw material costs, according to a pre-close trading update from parent group, Associated British Foods plc.

The group will announce its full year results for the 52 weeks to 14 September 2019 on November 5, 2019.

In the trading update, AB Agri said its adjusted operating profit has reduced, however, following the loss of high margin co-products from the Vivergo bioethanol plant, which shut down operations last autumn.

The company also reported lower sales of sugar beet feed.

It noted that its premix and starter feed business, Speciality Nutrition, successfully commissioned a new factory at Fradley Park, Staffordshire, in October last year, though profits for that division were lower than last year, with 2018 benefitting from unusually high vitamin prices.

That business invested £20m (US$24.6m) on the new facility; £13.1 was spent on installing the processing equipment at the Fradley Park site, which is close to the company’s headquarters facility at Rugeley in Staffordshire. A further £5.5m was spent at Rugeley to reconfigure operations there, with the decommissioning of the older of the three production facilities, and £1.4m was invested in software systems and upgrades.

The company said the new site has the capacity to make some 50,000 tons of product per year at full stretch, with the refurbished Rugeley site a further 20,000 tons.

In February this year, AB Agri acquired a specialist young animal nutrition business based in Smigiel, Poland, which it said would operate as Primary Diets Polska.

The AB Agri trading update also showed that its Frontier business, a joint venture with Cargill, which focuses on crop production and grain marketing, improved its result from grain trading following high wheat prices in the first half and increased market volatility.

Sales and profit at AB Vista declined though, reflecting an increasingly competitive phytase enzyme market. “But we are encouraged by the launch of Signis, our innovative animal digestion aid.”

Profit fell in its Chinese feed business with lower sales to the dairy and pig sectors, a fallout of the African Swine Fever (ASF) outbreak.

In terms of Brexit readiness, ABF reported that all its businesses have completed practical preparations should the UK no longer be a member of the EU.

“Contingency plans are in place should some of our businesses experience disruption at the time of exit.”